Osborn v McDermott

REASONS FOR JUDGMENT This is an application by the debtor, Colin Bartlett, to set aside a bankruptcy notice dated 1 July 1997, and served on 7 July 1997. The bankruptcy notice particularised a total debt of $85,556.30 based on a judgment debt of $83,203.81. The applicant disputes the validity of the bankruptcy notice on the grounds that the amount stated in the notice is not owed by him at all; nor was it owed as at 1 July 1997. The background to this application appears from the affidavit of Stephen John Pyman ("Mr Pyman") filed 14 August 1997 and the affidavit of Darrin William Edwards ("Mr Edwards") filed 30 July 1997. The judgment debt arose pursuant to an order of the Queensland Building Tribunal on 4 February 1997. That judgment was filed in the District Court on 27 February 1997 pursuant to s 91 of the Queensland Building Services Authority Act 1991 (Qld). The applicant subsequently filed an application for leave to appeal in the District Court. The application for leave to appeal was to be heard on 8 April 1997. The parties' then solicitors, Mr Pyman of Barwicks for the applicant and Brett Freudenberg ("Mr Freudenberg") of Corrs Chambers Westgarth for the respondents, settled the dispute on 7 April 1997. The settlement was effected in a telephone conversation on 7 April 1997 between Mr Freudenberg and Mr Pyman after a number of conversations on that day containing offers and counter-offers. Both Mr Pyman and Mr Freudenberg were called to give evidence. Mr Pyman's recollection did not extend further than his notes, although there was no real conflict between his version of the conversation and Mr Freudenberg's version. I accept that the settlement occurred on the basis set out in the letter from Corrs Chambers Westgarth to Barwicks dated 8 April 1997. That letter, so far as is relevant, said :- "... We confirm our clients are willing to accept your client's offer to settle this matter on the following conditions: · your client pay the sum of $47,029.00 by 7 May 1997; · the amount once received will be in full and final satisfactiion [sic] of the outstanding claims our clients have against each other; · the parties are to bear their own costs of and incidental to the Application. We enclose our proposed Settlement Deed detailing this agreement for your client to execute. We confirm today at the Application to seek leave to appeal, the matter will be adjourned to the settlement list with the liberity [sic] for it to be relisted." The application for leave to appeal was, by consent, adjourned to the settlement list on 8 April 1997, with no order as to costs. Barwicks confirmed the terms of settlement in a letter dated 10 April 1997 that, so far as is relevant, said :- "We acknowledge receipt of your letter dated 8 April 1997. We agree with the terms of settlement as set out in that letter. We are taking our client's instructions in relation to the deed of settlement enclosed by you. You will appreciate that it was not a term of the settlement negotiations that such a deed be executed." The deed of settlement and a subsequent variation to that deed were not executed. The applicant failed to make the payment of $47,029 or any part of it by 7 May 1997 or at all. The respondents then sought to continue with enforcement of the original judgment for $83,203.81 which resulted eventually in the issue of the bankruptcy notice the subject of this application. The issue for decision in this case is whether the terms of the settlement entered into on 7 April 1997 are such that in the event of non-payment by the applicant of the settlement sum the respondents were precluded from enforcing the original judgment. Although the applicant's solicitors in a letter dated 9 May 1997 asserted that the judgment debt had merged in the settlement, and that the respondents' only remedy in the event of non-payment of the $47,029 was to sue the applicant for $47,029 as an amount due under the settlement, that submission was not made by counsel for the applicant on the hearing of the application. Rather, it was submitted that the judgment at all times remained in existence until payment, and in default of payment, remained on foot but subject to the application for leave to appeal, then in abeyance in the District Court. Counsel for the applicant submitted that the terms of settlement, properly construed, provided its own remedy for the applicant's failure to make the agreed payment. That remedy was relisting by the respondents of the applicant's District Court application for leave to appeal. The issue of a bankruptcy notice, it was submitted, was not a remedy permitted by the settlement. It was submitted by counsel for the applicant that such a result followed from a proper construction of the terms of settlement contained in the letter from the respondents' solicitors dated 7 April 1997 and the file note of the final telephone conversation on that date made by Mr Freudenberg of his conversation with Mr Pyman. The file note said :- "T/o Stephen Pyman Client is willing to settle re: his offer for $47,029.00 inc